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Electronic Markets (electronic + market)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	60%

Selected Abstracts

ADVERSE SELECTION IN ELECTRONIC MARKETS: EVIDENCE FROM ONLINE STAMP AUCTIONS

THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 4 2004
Sanjeev Dewan
We analyze adverse selection costs in online stamp auctions, based on a comparison of prices on eBay with those of matched stamps at a specialty stamps auction site in the U.S., Michael Rogers, Inc. (MR), which we know a priori has low quality uncertainty. We find that buyer prices are 10,15% lower on eBay as compared to MR, and the price difference, increases with the value of the stamps. Consistent with this adverse selection discount we find that the seller reputation mechanism on eBay has an economically modest, although statistically significant, effect on auction price and probability of sale. [source]

Memoirs of an indifferent trader: Estimating forecast distributions from prediction markets

QUANTITATIVE ECONOMICS, Issue 1 2010
Joyce E. Berg
C11; C93; D8; G1 Prediction markets for future events are increasingly common and they often trade several contracts for the same event. This paper considers the distribution of a normative risk-neutral trader who, given any portfolio of contracts traded on the event, would choose not to reallocate that portfolio of contracts even if transactions costs were zero. Because common parametric distributions can conflict with observed prediction market prices, the distribution is given a nonparametric representation together with a prior distribution favoring smooth and concentrated distributions. Posterior modal distributions are found for popular vote shares of the U.S. presidential candidates in the 100 days leading up to the elections of 1992, 1996, 2000, and 2004, using bid and ask prices on multiple contracts from the Iowa Electronic Markets. On some days, the distributions are multimodal or substantially asymmetric. The derived distributions are more concentrated than the historical distribution of popular vote shares in presidential elections, but do not tend to become more concentrated as time to elections diminishes. [source]

A Bayesian analysis on the effect of multiple supply options in a quick response environment

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 8 2003
Hag-Soo Kim
Abstract In the apparel industry, vendors often suffer from high mismatches in supply and demand. To cope with this problem, they procure the same style product from different suppliers with different manufacturing costs. Especially in the quick response environment, which allows vendors to monitor trends in customer demand and search for available suppliers through the electronic market, they have additional opportunities to improve their decision-making. In this paper, we propose an analytical profit maximization model and develop efficient decision tools to help both the middle and lower level managers pursuing this strategy. Furthermore, we have shown how significantly the vendors' potential competitive edge can be improved by exploiting multiple supply options, even at the expense of high premium procurement costs for late orders. The effect is critical, especially in a highly competitive market, and it has important implications for the top managers. © 2003 Wiley Periodicals, Inc. Naval Research Logistics, 2003 [source]

The Dark Side of Information and Market Efficiency in E-Markets,

DECISION SCIENCES, Issue 3 2006
Varun Grover
ABSTRACT Price dispersion reflects the differences in prices for identical products. While in physical markets such dispersion is prevalent due to high search costs, many researchers argue that search costs and price dispersion will be much lower in electronic markets (e-markets). Empirical evidence does not support this contention, and researchers have studied search costs, market factors, and service-quality factors to explain this dispersion. Previous research has largely assumed that more information is better. By ignoring the dark side of information, we argue that only a partial understanding of price dispersion is possible. In this article, information overload and equivocality are studied as two dark attributes of information that lead sellers to different pricing decisions in e-markets. Hypotheses relating these attributes to price dispersion are supported through analysis of 161 product markets. This work opens up new avenues in the study of e-markets and discusses the implications of these findings for research and practice on consumer and seller decisions. [source]

The impact of electronic trading on bid-ask spreads: Evidence from futures markets in Hong Kong, London, and Sydney

THE JOURNAL OF FUTURES MARKETS, Issue 7 2004
Michael J. Aitken
During 1999 and 2000, three major futures exchanges transferred trading in stock index futures from open outcry to electronic markets: the London International Financial Futures and Options Exchange (LIFFE); the Sydney Futures Exchange (SFE); and the Hong Kong Futures Exchange (HKFE). These changes provide unique natural experiments to compare relative bid-ask spreads of open outcry vs. electronically traded markets. This paper provides evidence of a decrease in bid-ask spreads following the introduction of electronic trading, after controlling for changes in price volatility and trading volume. This provides support for the proposition that electronic trading can facilitate higher levels of liquidity and lower transaction costs relative to floor traded markets. However, bid-ask spreads are more sensitive to price volatility in electronically traded markets, suggesting that the performance of electronic trading systems deteriorates during periods of information arrival. © 2004 Wiley Periodicals, Inc. Jrl Fut Mark 24:675,696, 2004 [source]